To mark the release of Star Wars Episode I: The Phantom Menace, a whole new collection of 3 and 3/4 figures were released under the title of Episode I. At the time, this line was unique from other lines in that it covered only the characters and droids from the new movie. As a prelude to the film, and to increase interest, two preview items were made available in 1998. The first was a mail-away promotion for Jedi MasterMace Windu. The other item was a large scale Battle Droid on a STAP, which was available at retail and labeled "Episode I coming in 1999".

The full initial waves of figures, vehicles, and beasts were released at midnight, May 3rd, 1999. The line introduced a new level of paint and sculpture detail, as well as increased points of articulation on select figures. A new pack-in feature was also included called COMMTech chips, these chips also doubled as stands for the figures and, with the addition of a separately sold chip reader, enabled figures to electronically play phrases from the film. This feature was also included in the last small wave of Power of the Force figures produced at the time. In some E.U. and Asian countries these COMMTech chips were not made available due to health and safety concerns or simple disinterest in the new technology. In this case, Hasbro packaged either a bonus battle droid or pit droid with the figure. In the UK the name COMMTech was renamed COMMTalk due to licensing issues.